I have a hard time ignoring how we have crashed into resistance here at the rate and strength we have. This should lead to a few scenarios that could play out. This next week will be critical to overall direction. Generally in my experiences when we approach support or resistance at this pace its tough to get rejected back out.
If your bearish (which I am) your looking for one of 3 things to happen this coming week in projection "B":
1) We turn friday into island reversal and open below fridays open and begin downward in a similar mirroring action to the way up. 2) We gap up demonstrably to around 2720 ish and fade the week, similar to that of first week of December. (most bearish imo) 3) We gap down Monday and fake higher lower all week only to resolve lower in the following week (I believe high odds of this)
If your bullish your looking for consolidation in projection "A". That is it! I don't feel as though continued upward movement next week is bullish. In fact that only makes me more bearish as this will increase the counter move in size and velocity. A mild move to the downside to symmetrically complete the unconfirmed IHS on the chart could also be a likely bullish outcome (I give this high odds)
Overall the range the market was in last week should have offered more resistance in the moment than it did. Take it as you may. Generally a build up of pressure directly below resistance and THEN and blast into the zone would indicate we will continue to trade into that new range. When we slice into a new range like a razor sharp knife as we have with little to no consolidation or pullback that is an indicator that we are going to be coming back out.
I am also noting a few characteristics from Friday that make me think there is a RTH high still coming above Friday's on Monday:
1) ES traded higher in the after hour session on Friday afternoon after the bell was closed making a neww high over Friday's RTH high. Upward auctions do not end the AH generally although they can. 2) Compare SPY to ES close. There was some OE manipulation and pegging there for sure. This manipulation turned the afternoon from excess to plate crowding to form semi poor high.
Trade closed manually
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would recommend cover into todays early morning action. Noting 45 degree line in overnight activity, possible to pounce higher again
@joeagnone, thanks. Yours is the best analysis I found here on TV. Monday is a MLK day so only ES will be trading and will most likely be a doji or a reversal day. Personally I feel 2690-2705 is the most likely reversal area.
I am your first follower so please keep up the good work! Some analysis on gold and oil will be appreciated!
joeagnone
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@coolingla, Thank you for the kind words and follow much appreciated!
I agree with the Monday doji scenario. It would be a sneaky way for Market makers to slip price under or above the range of friday going into Tuesday. I'll update you with my thoughts and actions on Monday and Tuesday. Will be interesting to see how it plays out!
I heard once from another trader the market likes to "Trick, trap, and frustrate"
so true
chinawildman
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Can you clarify the statement in the first paragraph? "...in my experiences when we approach support or resistance at this pace its tough to get rejected back out." but then later you say: "When we slice into a new range like a razor sharp knife as we have with little to no consolidation or pullback that is an indicator that we are going to be coming back out." Feels like you're contradicting yourself or am I just not reading it right?
On this primary leg higher we have made since xmas eve, If we had consolidated a bit before pushing into this range as opposed to blasting right through it as we have, the chances of acceptance are increased in that new price zone. Price has had time to decide if value can be had at the pre breakout level and is ready to test higher. The subsequent base that it took to push higher increases the amount of support also increasing the likelihood we stay in our new found range. The action of the consolidative trading prior to breaching resistance will lack excess just in nature, and ultimately we are in need of an excess high to reverse lower. The price action thats critically in focus is the range of Friday. Because we launched through resistance and into a new zone unabated (to a degree depends on how you like to draw your lines also), we are on red alert watch for the rejection back out and it also increases the likelhood we are coming back out. ESPECIALLY on this first approach. As a rule of thumb if im looking to enter a trade at a certain level I like to get filled on the first approach to that level. I rarely will take a trade on the second approach as that support or resistance is now weakened. If we knock on that level 3+ times I start to adjust to assume we are going through it.
I apologize for the wordiness and hopefully I explained the thought a bit better. In essence the only scenario I see as bullish here is consolidation and that would be my trigger to cover. If were coming back out its happening this week or at the very very least the move back out should be underway no later than Thur-Friday.
chinawildman
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@joeagnone, Thanks for the explanation. I too think the fact that we just blasted through that 2650 gap so easily (especially considering it was driven by news that has since been denied by Trump himself) means we're coming back down... (probably back to 2620-2600)